Some student-loan borrowers might get up to $20,000 in debt cancellation through Biden's new plan — but experts who helped craft it are pushing for even more

• The final negotiation session for Biden's second attempt at debt relief concluded on December 12.
• Negotiators disagreed with some of the Education Department's proposals, including a cap on relief.
• Two of the negotiators told BI they hope borrowers with hardship will be included in the final plan.

A key step toward crafting President Joe Biden's next attempt at student-loan forgiveness ended on a contentious note.

Since October, the Education Department has been meeting with a group of negotiators — comprised of borrowers, legal experts, advocates, and more — to provide input on what student-debt relief under the Higher Education Act of 1965 should look like.

After the Supreme Court struck down Biden's first attempt at debt relief at the end of June, the Education Department promptly announced it would pursue another route under the HEA, which requires the administration to undergo a process known as negotiated rulemaking. The process is lengthy, and it entails a series of negotiation sessions with stakeholders to help create the draft text, and the public later has an opportunity to comment on the proposals.

After six days of sessions that began in October, negotiations concluded on December 12 — and members of the committee were not able to reach a consensus on all of the relief provisions the department proposed. Some sticking points for the negotiators included the department's proposed cap of $20,000 on any relief borrowers might get, along with the exclusion of a relief category for borrowers experiencing hardship.

Jessica Ranucci, an attorney at the New York Legal Assistance Group and a negotiator on the committee, told Business Insider that "those limits were disappointing."

"I think that the Supreme Court's decision does make this negotiation much more complicated because we are working on a backdrop of legal principles that are unsettled," Ranucci said, adding, "I don't think that the Supreme Court decision in any way forecloses any avenue towards broader debt cancellation."

While negotiators asked the department to add another session to further discuss relief for borrowers with hardship, the department has not yet commented on whether it will do so. A spokesperson told Business Insider that "the Biden-Harris Administration remains deeply committed to providing student loan relief for as many borrowers as possible."

"Since day one, we have made significant progress in identifying different ways to deliver relief for more than 3.6 million borrowers and fix our broken student loan system, and we will continue to identify more opportunities," the spokesperson said.

"We thank the negotiators for their work to reach consensus on many key issues," the spokesperson continued, "and will share more information on the next step in the process — including the issuance of a notice of proposed rulemaking and our continued work to deliver relief to borrowers — soon."

Where the relief currently stands

The department's proposals for relief focus on up to $20,000 in relief for five groups of borrowers:

1. Those on income-driven repayment plans with balances greater than what they originally borrowed.

2. Other borrowers with balances greater than what they originally borrowed.

3. Borrowers whose loans entered repayment at least 20 years ago.

4. Borrowers eligible for relief under targeted loan forgiveness and repayment programs, like Public Service Loan Forgiveness, but have not yet applied.

5. And those who attended schools that left them with unaffordable debt compared to post-graduation earnings.

Many of the negotiators did not agree with the department's proposed $20,000 cap on the forgiveness — an amount the department's representative described as "meaningful." Wisdom Cole, national director of the NAACP's youth and college division and a negotiator on the committee, told Business Insider that $20,000 "is the floor, it's not the ceiling."

"We have to be able to ensure that this is as expansive as possible because there are a lot of people whose debt is far above that," Cole said. "The average Black borrower has around $50,000 in student debt. "That $20,000 is not going to be enough to make that sufficient of a difference."

Promising signs for borrowers — but experts and lawmakers want more

Ranucci highlighted the group of borrowers who attended low-value schools that left them with too much debt compared to earnings, particularly from schools that displayed misconduct that led the Education Department to cut off the flow of federal financial aid. She said it's "tremendous" that the committee reached consensus on giving those borrowers relief.

"This regulation really is super important in that it bridges the gap between students who need relief when their school ends participation in the federal financial aid program and students who are already entitled to get it," Ranucci said.

"These are some of the most disadvantaged borrowers because by definition, they go to the programs that the Department of Education has decided are no longer entitled to participate in the federal financial aid program," she added.

But many of the negotiators — and some Democratic lawmakers — want the Education Department to consider relief for even more borrowers as it moves forward in the process. A group of Democrats including Sen. Elizabeth Warren and Rep. Ayanna Pressley sent a letter to Education Secretary Miguel Cardona on December 11, urging him to consider broader relief — including removing the $20,000 cap for borrowers whose balance exceeds the principal amount.

"We believe more must be done to improve the draft regulatory text to meet President Biden's objective of 'provid[ing] student debt relief to as many borrowers as possible as quickly as possible,'" they wrote.

Cole said he hopes the department will truly take more expansive relief into consideration.

"Hardship is an area we were really looking forward to, to leaning in on, and discussing the various hardships that Black borrowers go through in even struggling to pay back their student debt," Cole said. "And so I think that if we want to get this right, we have to recognize that having debt in itself is the hardship. If you are having to take on student debt, that is the hardship, point blank, period."